Overview
Marginal Revenue Product (MRP) is a key concept in economics that helps businesses understand the value of additional resources. By calculating MRP, firms can make informed decisions about hiring and resource allocation, ensuring they maximize their productivity and profitability. MRP is influenced ...
Key Terms
Example: If hiring one more worker increases output from 10 to 15 units, the marginal product is 5.
Example: If a company sells 100 units at $10 each, total revenue is $1,000.
Example: If selling one more unit increases revenue from $1,000 to $1,010, marginal revenue is $10.
Example: A company may allocate more funds to marketing if it sees higher returns.
Example: Higher MRP can lead to higher wages for workers.
Example: Perfect competition has many sellers, while monopoly has one.